The program is implemented at the request of the Federal Ministry for Economic Cooperation and Development (BMZ) and in cooperation with the Council of Ministers of Finance and Treasury of Central America, Panama, and the Dominican Republic (COSEFIN). Together, they are committed to fostering the strengthening of regional institutions, learning, and innovation through knowledge sharing and cooperation among their member countries to address similar challenges.

To tackle these challenges, one of the priorities is the implementation of the actions defined in the COSEFIN Fiscal Interest Matrix Work Plan, thereby strengthening COSEFIN’s regional institutional framework. In this way, the governments of Guatemala, El Salvador, Honduras, Nicaragua, Costa Rica, Panama, and the Dominican Republic can address the obstacles presented by the impact of COVID-19 and other crises in an immediate and coordinated manner, making the most of their shared potential.

The Program seeks to strengthen good governance in public finances in the SICA countries; it also contributes to improving their resilience, especially to the economic impacts they face after the COVID-19 pandemic, natural disasters, and other crises.

Good Financial Governance allows governments to have effective, efficient, and modern institutions that transparently demonstrate how resources contributed by citizens are used to address their priority needs, which have been exacerbated by the pandemic, such as employment, health, education, and security.

The economies of Central America, Panama, and the Dominican Republic are too small to individually develop efficient and deep capital markets. Financial markets in this region are characterized by a predominance of public debt, whose dynamism and operational efficiency consequently depend on the trading mechanisms for this type of instrument. In this regard, a significant regional effort was made during the past decade toward harmonizing domestic public debt markets, as a first step toward building a regional market.

In this context, the program “Design of a clearing, settlement, and custody mechanism to facilitate a Regional Primary and Secondary Public Debt Market with its corresponding investment budget and governance structure” was launched by the Central American Monetary Council (CMCA), in coordination with the Council of Ministers of Finance of Central America, Panama, and the Dominican Republic (COSEFIN), and the securities market supervisory bodies.

The aforementioned technical cooperation program is notable for having trained a generation of central bank and finance ministry officials responsible for public debt management, thus contributing to the professionalization of public debt management in the region. Furthermore, as a result of this process, in 2013 the CMCA and COSEFIN approved the regional standards that have since served as a guide for the development of CAPARD national debt markets.

Through Resolution COSEFIN-03/2017 of April 28, 2017, the Council resolved to request support from the CABEI for assistance and continued progress on this issue and in identifying appropriate strategies in coordination with COSEFIN and the CMCA. It also resolved to instruct the CABEI to play a key role in the development and integration of a regional capital market.

In this context, the BCIE, the CMCA and COSEFIN have decided to reactivate the initiative that seeks to develop the domestic public debt markets of CAPAARD, in accordance with international standards, with the vision of establishing, in the medium term, a regional primary and secondary market for public debt.